LONDON (AFX) - The euro continued to trade in narrow ranges against all major currencies in thin and listless midday trade, with investors sidelined ahead of tomorrow's interest rate decision by the U.S. Federal Open Market Committee.
Dealers noted that this afternoon's release of U.S. December consumer confidence data might provide some trading incentive. A sharp deterioration in consumer confidence since its peak in May 2000 had been one of the major reasons for the U.S. Federal Reserve to cut rates in a surprise action on Jan 3.
"Given that the market is fairly optimistic that the Fed will achieve a soft landing, any surprise to the downside would weigh on the U.S. dollar," Michael Klawitter at Westdeutsche Landesbank said. Against that backdrop, the analyst does not believe that the euro will break through it's support of 0.9110 usd in the near future.
U.S. consumer confidence is expected to have dropped to 125.0 in January from 128.3 last month, given the sharp decline in the University of Michigan's consumer sentiment index.
The euro traded around 0.9178 usd, having fallen to a low of 0.9146 usd earlier today.
News that the indicator of French business confidence fell more sharply-than-expected to +17 in January from +25 in December had only a limited impact on the euro, dealers noted.
Sterling was little changed against the dollar and the yen, despite the release of slightly weaker-than-expected consumer confidence data for December.
Noting that today's data had little impact on the market, with investors holding their breath ahead of the FOMC's rate decision and a series of key U.S. data releases, Will Rugg at Standard & Poor's MMS said: "1.1 billion is still a quite robust figure, signalling that consumer demand is pretty robust in the UK as opposed to the U.S. From that point of view, cable should remain underpinned."
His view was supported by Micheal Hume at Lehman Brothers, who said in a research publication: "All in all, despite last week's softer-than-expected Q4 GDP figures, the domestic economy still appears to be in good shape with little sign of consumers wanting to save more."
UK net new consumer credit totalled 1.1 bln stg in December on a seasonally-adjusted basis, compared with November's unrevised total of 1.2 bln, according to data released by the Bank of England. The AFX News median of analysts' forecasts for October net new consumer credit was 1.2 bln stg.